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TMI Blog2022 (10) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... OJ KUMAR AGGARWAL , ACCOUNTANT MEMBER Appellant by : Shri R. Vijayaraghavan , Advocate Respondent by : Shri P. Sajit Kumar , JCIT ORDER Per Mahavir Singh, Vice President This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-5, Chennai, in ITA No. 75/CIT(A)-5/2018-19 dated 05.09.2019 for the Assessment Year 2016-17. The Assessment was framed by Asst. Commissioner of Income Tax, Non Corporate Circle-17(1), Chennai u/s. 143(3) of the Income Tax Act, 1961 (hereinafter 'the Act') vide order dated 29.12.2018. 2. The only issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of the A.O in making addition of maintenance charges received on let out property amounting to Rs. 37,98,900/- as assessable under the head income from house property as against claimed by the assessee under the head income from other sources . For this, the assessee has raised various grounds which are argumentative nature and exhausted and hence, need not be reproduced. 3. The brief facts of the case are that the assessee owns two floors i.e., 8th 9th floors of the commercial property known as Men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mity in the action of the AO on this count. As seen from the written submission furnished by the AR before me, the findings of the AO cannot be disagreed with as there is no other High Court judgment not agreeing with the ratio of Hon'ble Punjab Haryana High Court cited supra. There is no force in the arguments of the AR in saying that the question whether maintenance charges are to be taxed under the head income from other sources or not because the Hon'ble Punjab Haryana High Court has categorically stated that the term rent includes any amount which is paid in consideration of the property being let out. Further, it is held that the maintenance charges must form part of the rent. Respectfully following the judgement of the Hon'ble Punjab Haryana High Court in the case of Sunil Kumar Gupta Vs. ACIT in 389 ITR 38, I am also of the considered view that the maintenance charges received by the appellant at Rs. 37,98,900/- constitute income from house property. The addition made at Rs. 25,09,577/- after allowing statutory deduction u/s. 24 of the Act at Rs. 12,89,323/- stands confirmed. The grounds taken in the appeal are dismissed. Aggrieved, the assessee cam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenance of the building. The maintenance pertains to basement, ground floor and 10 floors to cater to all tenants, though the assessee owns two floors only. The maintenance charges are paid to the individual owners. The relevant vouchers were produced before the Assessing Officer. 7. On the other hand, the Ld. Sr. D.R, Shri P. Sajit Kumar, JCIT relied on the judgment of Hon'ble Punjab Haryana High Court in the case of Sunil Kumar Gupta Vs. ACIT, supra, and also relied on the Tamil Nadu Apartment Ownership Act, 1994 and he referred to s. 6 of sub s. (1)(2), which reads as under: 6. Common areas and facilities- (1) Each apartment owner shall be entitled to an undivided interest in the common areas and facilities in the percentage specified in the Deed of Apartment and the limited common areas and facilities. Such percentage shall be computed by taking as the basis the extent of the plinth area available in the apartment in relation to the total extent of the plinth area available in the building. (2) The parentage of the undivided interest of each apartment owner in the common areas and facilities, and in the limited common areas and facilities, if any, as exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the common areas and facilities and the limited common areas and facilities shall not be assessed to any such tax separately. 9. In view of the above, the Ld. CIT-DR stated that the maintenance charges are part of rent for the purpose of computing the annual value of the property. He referred to s. 24 of the Act which provides that the income chargeable under the head income from house property shall be computed after making the deductions specified therein. He also stated that even the amounts received under sub license had been brought under the head income from house property and the consequent maintenance charges are to be included in the rent. He argued that the annual value of the property which provides several common amenities such as swimming pool, gymnasium, security, car parking and elevators would be the same as the annual value of such property in the same area, but without these facilities. He argued that where the agreement provides that the owner shall pay the amounts for the common facilities, maintenance charges, outgoings etc. then, it is obvious and reasonable to presume that the same is factored into the rent, fee or the compensation payable by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LESSOR increased maintenance charges if and when the same is The LESSEE shall pay the monthly maintenance charges every month in advance to the LESSOR. That in the event of the LESSOR failing to pay the monthly maintenance charges to the Association/Company formed for the purpose of maintaining the common amenities, in such an event, the LESSOR shall pay the said maintenance charges directly to the said Company/Association and in such an event, the LESSEE need not pay the maintenance charges to the LESSOR for the said month. 11. The Ld. counsel for the assessee stated that it is very clear that the maintenance charges are separately charged and for this although it is same lease deed, but for maintenance charges a separate clause is there for collection of maintenance charges. In view of these, the assessee contended that it is established that he has engaged in systematic and organized activity of providing services to the occupiers of all the floors of the premises and therefore, the receipts from these occupiers of all the floors, the maintenance charges received are income from other sources . We have noted that when the owner of the building gets along-with the rent, ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... organized and systematic manner with the help of large staff of the same, the income is to be assessed as income from business or profession. Honb'le Supreme Court considered this issue in Para 6, 7 8, which reads as under: 6. We are referring to these observations only to show that the activities of the assessee with which we are concerned in these appeals are business activities. We should not be understood as having laid down that in assessing the profits and gains of a business, the profits and gains arising from the several activities of that business can be separately computed or separately brought to tax. If the facts are as found by the Tribunal-we must assume for the purpose of this case that the facts were correctly found by the Tribunal as there was no challenge to the correctness of those findings in the question referred to the High Court-then it is quite clear that the assessee had two sources of income and not one source as found by the High Court. 7. Mr. Manchanda, learned counsel for the department, contended with some emphasis that there was no justification for the Income-tax Officer, the Appellate Assistant Commissioner as well as the Tribunal fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be considered as having laid down the rule that, whenever a premises is let out with fixtures and furnitures for a consolidated rent or when the landlord in addition to providing fixtures and furnitures also renders services incidental to the letting out of the premises and charges a consolidated rent, it may be considered that the rent realised would have to be split up and assessed separately partly under section 9 and partly under some other provision. There is no basis for this apprehension. Herein we are not considering any abstract proposition of law. We are only laying down the law applicable to the facts found. 13. The Ld. counsel also relied on the decision of Hon'ble Madras High Court in the case of A.R. Complex Vs. ITO 292 ITR 615 (Mad.), wherein the maintenance charges or charges for certain services was held to be income from other sources or income from business or profession . The Hon'ble Madras High Court has considered this issue in Para 7, as under: 7. An alternative argument is also advanced that the whole receipt amount should not be assessed under the head 'Income from house property' on the ground that certain portion of the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the order of the Tribunal reads as under: 3. We have given very careful consideration to the submissions and to the various documents filed before us. Referring to the balance-sheet of the firms we notice that there are no generators. There is a land and building. Referring to the profit and loss account we find the salary at Rs. 27,600 and depreciation claimed and partners remuneration and some general expenses. This is only to show that the claim of the assessee that it had maintained some office and incurred expenditure in this regard is not substantiated. The authorities therefore were justified in coming to the conclusion that such rental receipts are assessable as income from house property. Upholding their orders, both the appeals are dismissed. P L as well as balance-sheet were filed before the authorities wherein all the details regarding expenditure as well as receipts were reflected. There is no proper consideration of the details regarding providing services as well as receipt of the same by the authorities below. The authorities ought to have considered the same. If it is necessary, they have to bifurcate a portion of the rental receipt into various heads ..... X X X X Extracts X X X X X X X X Extracts X X X X
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